Best Structure for Partnership?

[Joshua Steven Ferrell]

Hello all,

What is the fairest way to partner with someone with the following situation? Two friends want to purchase a rental property together. Both have capital to invest, but one person is going to take on 100% of the landlord duties. The other partner will just be a financial investor. Neither of us are sure how to structure the LLC or what this should look like. We want to make sure it's fair because we don't want to hurt a friendship over it, so we really want to have this buttoned up before making a purchase.

Does anybody have any recommendations on a structure that could work for this situation?  

[Chad McMahan]

Quote from @Chris Levarek:

@Joshua Steven Ferrell The financial investor has it easy. Either bake in the property management as an expense(paid to one of the parties) or be sure the partnership compensates for it with extra ownership. 

Let's put it this way, one side of the party after close gets to be passive. One side of the party will be working their tail off daily forever, until the property sells of course or new management is put in place.

The financial investor has it easy.

That being said, 50/50 could be good if neither side is experienced. Both are learning. Make sure you plan an exit of the deal, what will happen if you disagree and clear accountability. What happens if the A/C unit breaks, who will pay? What happens if revenue is below expectation, and more capital is needed? Write these things in there with an attorney.

Chris said it quite well.
To piggy back on that- *IF* you structured it where it's not 50/50, it will eventually lead to resentment.
Also, for management- the question needs to be asked- Whichever of you will manage... will this person do a better job than the best 3rd party money can buy at the same rate?